U.S. Base Oils Continue to Recover

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U.S. Base Oils Continue to Recover
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Base oil output in the United States was 11% lower than the running five-year average for that month, the industry’s best performance since the COVID-19 pandemic battered the global economy.

Market insiders said the data – released recently by the U.S. Energy Information Administration – reflect encouraging rebounds in demand for base oils and finished lubricants.

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The 4.5 million barrels of base oils that the nation’s refiners produced in September represented a slight step back from 4.6 million barrels made in August, but it was significantly closer to recent norms for the corresponding months. August’s output was 20% less than the average for that month in the five previous years. Since March U.S. output ranged between 13% and 25% less than the five-year average for corresponding months.

Base oil marketers said September’s output could have been even higher if Excel Paralubes’ plant in Westlake, Louisiana, had not spent the month sidelined by the after effects of Hurricane Laura. Sources said they are encouraged that demand has recovered as much as it has, but they questioned whether it is practical for output to rebound much more in the near term.

“I think the market has come back fairly well,” said an official with one base oil producer, who asked not to be identified. “Refineries are still ramped down because demand for middle distillates is still off, and this is constraining base oil operations. I don’t think base oil production will come back all the way until demand for fuels comes back, especially jet fuel.”

September production levels were particularly strong for paraffinic base oils. Output of those oils was 3.8 million for the month – just 9% off the running five-year average. Refiners also produced 640,000 barrels of naphthenic base oils, 21% less than the running five-year average.

The United States is the world’s largest producer of base oils.

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